Keith Hall

Keith Hall was a senior research fellow at the Mercatus Center at George Mason University from April 2012 to September 2014. From 2008 to 2012 he served as the 13th Commissioner of the Bureau of Labor Statistics (BLS). In this role, he headed the principal fact-finding agency in the federal government in the broad field of labor economics and statistics. The BLS is an independent national statistical agency that collects, processes, analyzes, and disseminates essential statistical data to the American public, the US Congress, other federal agencies, state and local governments, business, and labor.

From 2005 to 2008, Hall served as chief economist for the White House Council of Economic Advisers, where he analyzed a broad range of fiscal, regulatory, and macroeconomic policies and directed a team that monitored the state of the economy and developed economic forecasts. Before that, he was chief economist for the US Department of Commerce, where he provided technical advice regarding the scope, emphasis, and state of the economic and statistical activities of the US Census Bureau and the Bureau of Economic Analysis. He also served as a special advisor to the Secretary of Commerce and regularly conducted and supervised research projects on a wide range of economic and policy issues. Hall also spent 10 years at the US International Trade Commission, where, among other responsibilities, he conducted and led independent studies related to international trade and trade policy. He has been a full-time faculty member in the economics departments at the universities of Arkansas and Missouri and has published a number of papers on international trade and international trade policy.

Hall received his BA from the University of Virginia and his MS and PhD in economics from Purdue University.

Working Papers

Concern over the impact of regulations on jobs and job growth is not new, but the efforts of federal agencies to forecast the likely impact of regulatory changes have never focused effectively on labor market impacts.

Charts

The aging of the population is not the sole contributing factor in the decline in labor force participation since 2007, contrary to what some have suggested. The participation rate has declined for every age bracket below 54 years old. The effects of these declines can be seen in the figure below. For each age range, we have calculated how much the labor force would need to increase to return to average participation rates in 2007. There would be an additional 4.4 million people under the age of 55 in the labor force today if the average participation rate reverted to 2007 levels.

The four and a half years since the Great Recession of 2008 could be called “the Dismal Recovery.” The most widely cited sign of progress toward a healthy economy has been the declining unemployment rate; however, the fall in the unemployment rate has largely been due to a shrinking labor-force participation rate rather than strong job growth. When you look at a broader range of labor market data, as in this week’s chart, the slow rate of progress toward recovery becomes apparent.

In 2012, public-sector employment made up more than 16 percent of the US labor market. Direct government employment fails to capture the full impact of government spending on state labor markets. Using federal contract data obtained from USAspending.gov, we estimated the percentage of private sector jobs actually financed by federal contract dollars in each state. The following four maps visualize our findings.

This week’s charts use data from the Bureau of Economic Analysis and Bureau of Labor Statistics to analyze GDP growth and payroll changes before and after the government shutdown that occurred from December 16, 1995 to January 6, 1996.

This week’s chart shows the share of part-time versus full-time job gains since December 2012. Data from the most recent monthly survey of households from the Department of Labor show that the economy added 288,000 full-time jobs since last December. While this full-time jobs number might seem like a lot, it pales in comparison to the 692,000 part-time job gains during this time.

Unsurprisingly, the slow recovery has been particularly hard on families. New data released last month by the Bureau of Labor Statistics show that 8.4 million families had at least one unemployed member. That makes the family unemployment rate 10.5 percent, well above the average national unemployment rate of 8.1 percent in 2012. Some 20 percent of families had no one working in 2012, a number that includes both the unemployed and looking for work and the jobless and not looking for work. The statistics are grim when we look at families with children under 18 years old, where 12.2 percent have no one working.

Once the recession ended, we should have seen economic growth continue to accelerate after the 2.4 percent growth in 2010. Instead, economic output has been more sluggish after each year since 2010. These charts, using data from the Bureau of Economic Analysis (BEA), clearly show that we are not really in an economic recovery.

The minor improvement in the unemployment rate, however, is entirely due to shrinking labor-force participation. The labor-force disagreement has lowered the participation rate by 0.4 percentage point this year alone and affects pretty much every category of worker with the exception of 55 and older. So, while we have had some encouraging hiring this year, this drop in labor-force participation exaggerates the progress shown in the drop in unemployment rate.

Policy Briefs

Virginia’s labor market is more troubled than its unemployment rate suggests. If labor force participation were at its 2007 level, the state’s unemployment rate would be as high as 8.6 percent. We estimate that 10 percent of Virginia’s workforce is indirectly employed by the federal government via federal contract expenditures. Excluding these jobs, private job loss in Virginia since 2007 is on par with the national average.

While the Great Recession had a moderately less severe impact on Pennsylvania than on the nation as a whole, the state’s recovery since the height of the recession has been slower than the national average. Sluggish economic growth is slowing the pace of the state’s labor market recovery.

Testimony & Comments

A full six years after the start of the Great Recession, the young today continue to face one of the worst labor markets of any generation. Not only is unemployment and underemployment a real problem, but our current very low rate of youth labor force participation may mean that millions of youth never become fully active in the labor market.

This comment addresses Environmental Protection Agency’s request for advice in “developing an ‘analytic blueprint’ of materials on the technical merits and challenges of using economy-wide models to evaluate the social costs, benefits, and economic impacts associated with EPA’s air regulations.” The agency plans to present these materials to a new Science Advisory Board (SAB) panel with “expertise in economy-wide modeling.”…

Raising the rate of labor force participation needs to be a central focus of federal policymakers, in order to strengthen our economy and raise the prospects of low-income Americans. To do this, we need to make it easier, not harder, for companies to increase hiring. We also need to encourage individuals to re-enter the labor force, not discourage them. Government assistance for the jobless is important, but the re-employment of the jobless is what we need to reduce poverty and lower income inequality.

Speeches & Presentations

Regulation can play an important role in a market economy where there are significant market externalities, incomplete markets, information asymmetries, or public goods. Ideally, regulation identifies and focuses on correcting these market failures with minimal economic cost.

Expert Commentary

One bit of good news in this report is the slight increase in construction jobs, which is an encouraging sign of people planning for the future. The next few reports will be critical to watch and see if this report is just a blip in an otherwise strong year, or the beginning of a downward trend.

Ahead of Friday’s unemployment report, Keith Hall, a senior research fellow at the Mercatus Center at George Mason University and former BLS Commissioner, explains what he’d like to see in the labor market data going forward.

The labor force participation rate for the prime working-age population — those between 25 and 54 years old — has been declining in the U.S. since 1997. One of the big reasons is a rise in the disability rate, which hit a record 5.2 percent in 2013. Since the start of the Great Recession, the withdrawal rate due to disability has accelerated.

The Bureau of Labor Statistics today announced that the economy added a welcome 288,000 jobs in June. Further, the acceleration in job growth raised the employment rate to 59 percent in June, its highest level since August 2009.